##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2006
 o
    
    Transition Report Under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to
 Commission File Number 0-22439
 FISHER COMMUNICATIONS, INC.
  WASHINGTON
    
    91-0222175(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)
 100 Fourth Ave. N
Suite 510
Seattle, Washington 98109
 (206) 404-7000
 þ o
  o þ o
 o þ




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##### 



PART IFINANCIAL INFORMATIONItem 1. Financial StatementsThe following Condensed Consolidated Financial Statements (unaudited) are presented for the
Registrant, Fisher Communications, Inc., and its subsidiaries.1. Condensed Consolidated Statements of Operations:
Three and six months ended June 30, 2006 and 20052. Condensed Consolidated Balance Sheets:
June 30, 2006 and December 31, 20053. Condensed Consolidated Statements of Cash Flows:
Six months ended June 30, 2006 and 20054. Condensed Consolidated Statements of Comprehensive Income:
Three and six months ended June 30, 2006 and 20055. Notes to Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Position and Results of OperationsItem 3. Quantitative and Qualitative Disclosures about Market RisksItem 4. Controls and ProceduresPART IIOTHER INFORMATIONItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSIGNATURESEXHIBIT INDEXEXHIBIT 10.2EXHIBIT 10.3EXHIBIT 10.4EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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ITEM 1  FINANCIAL STATEMENTS
 FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Six months ended
    
    Three months endedJune 30
    
    June 302006
    
    2005
    
    2006
    
    2005(in thousands, except per-share amounts)(Unaudited)Revenue
    
    $
    71,271
    
    
    $
    65,178
    
    
    $
    40,190
    
    
    $
    36,865Costs and expensesCost of services sold (exclusive of depreciation
reported separately below, amounting to $4,149
$6,391, $2,073 and $2,966, respectively)
    
    
    34,734
    
    
    
    35,915
    
    
    
    19,632
    
    
    
    19,947Selling expenses
    
    
    12,267
    
    
    
    11,260
    
    
    
    6,654
    
    
    
    6,355General and administrative expenses
    
    
    14,183
    
    
    
    16,026
    
    
    
    6,456
    
    
    
    7,060Depreciation and amortization
    
    
    5,027
    
    
    
    7,619
    
    
    
    2,511
    
    
    
    3,55866,211
    
    
    
    70,820
    
    
    
    35,253
    
    
    
    36,920Income (loss) from operations
    
    
    5,060
    
    
    
    (5,642
    )
    
    
    4,937
    
    
    
    (55
    )Other income, net
    
    
    1,767
    
    
    
    1,754
    
    
    
    881
    
    
    
    923Interest expense
    
    
    (6,822
    )
    
    
    (6,775
    )
    
    
    (3,368
    )
    
    
    (3,404
    )Income (loss) from continuing operations before income taxes
    
    
    5
    
    
    
    (10,663
    )
    
    
    2,450
    
    
    
    (2,536
    )Provision (benefit) for federal and state income taxes
    
    
    
    
    
    
    (4,095
    )
    
    
    658
    
    
    
    (1,074
    )Income (loss) from continuing operations
    
    
    5
    
    
    
    (6,568
    )
    
    
    1,792
    
    
    
    (1,462
    )Income from discontinued operations, net of income taxes
    
    
    562
    
    
    
    410
    
    
    
    476
    
    
    
    372Net income (loss)
    
    $
    567
    
    
    $
    (6,158
    )
    
    $
    2,268
    
    
    $
    (1,090
    )Income (loss) per share:From continuing operations
    
    $
    0.00
    
    
    $
    (0.76
    )
    
    $
    0.21
    
    
    $
    (0.17
    )From discontinued operations
    
    
    0.07
    
    
    
    0.05
    
    
    
    0.05
    
    
    
    0.04Net income (loss) per share
    
    $
    0.07
    
    
    $
    (0.71
    )
    
    $
    0.26
    
    
    $
    (0.13
    )Income (loss) per share assuming dilution:From continuing operations
    
    $
    0.00
    
    
    $
    (0.76
    )
    
    $
    0.21
    
    
    $
    (0.17
    )From discontinued operations
    
    
    0.07
    
    
    
    0.05
    
    
    
    0.05
    
    
    
    0.04Net income (loss) per share assuming dilution
    
    $
    0.07
    
    
    $
    (0.71
    )
    
    $
    0.26
    
    
    $
    (0.13
    )Weighted average shares outstanding
    
    
    8,708
    
    
    
    8,658
    
    
    
    8,710
    
    
    
    8,690Weighted average shares outstanding assuming dilution
    
    
    8,716
    
    
    
    8,658
    
    
    
    8,719
    
    
    
    8,690
  3




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30
    
    December 312006
    
    2005(in thousands, except share and per-share amounts)(Unaudited)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    8,513
    
    
    $
    19,622Receivables, net
    
    
    31,334
    
    
    
    28,166Income taxes receivable
    
    
    986
    
    
    
    986Deferred income taxes
    
    
    923
    
    
    
    665Prepaid expenses
    
    
    3,839
    
    
    
    4,295Television and radio broadcast rights
    
    
    3,043
    
    
    
    6,519Assets held for sale
    
    
    400Total current assets
    
    
    49,038
    
    
    
    60,253Marketable securities, at market value
    
    
    169,632
    
    
    
    170,053Cash value of life insurance and retirement deposits
    
    
    15,595
    
    
    
    15,303Television and radio broadcast rights
    
    
    1,551
    
    
    
    2,075Goodwill, net
    
    
    30,122
    
    
    
    38,354Intangible assets
    
    
    330
    
    
    
    1,244Investment in equity investee
    
    
    6,751
    
    
    
    2,759Prepaid financing fees and other assets
    
    
    9,498
    
    
    
    6,040Assets held for sale
    
    
    12,193Property, plant and equipment, net
    
    
    143,970
    
    
    
    144,312Total Assets
    
    $
    438,680
    
    
    $
    440,393LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    3,883
    
    
    $
    3,483Accrued payroll and related benefits
    
    
    5,393
    
    
    
    7,355Interest payable
    
    
    3,773
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    1,367
    
    
    
    5,524Other current liabilities
    
    
    4,960
    
    
    
    4,520Liabilities of businesses held for sale
    
    
    492Total current liabilities
    
    
    19,868
    
    
    
    24,691Long-term debt
    
    
    150,000
    
    
    
    150,000Accrued retirement benefits
    
    
    19,724
    
    
    
    19,644Deferred income taxes
    
    
    31,786
    
    
    
    31,381Other liabilities
    
    
    6,866
    
    
    
    5,056Liabilities of businesses held for sale
    
    
    48Commitments and ContingenciesStockholders EquityCommon stock, shares authorized 12,000,000, $1.25 par value; issued and outstanding
8,709,841 as of June 30, 2006 and 8,705,041 as of December 31, 2005
    
    
    10,887
    
    
    
    10,881Capital in excess of par
    
    
    8,900
    
    
    
    8,590Deferred compensation
    
    
    
    
    
    
    (159
    )Accumulated other comprehensive income, net of income taxes:Unrealized gain on marketable securities
    
    
    109,325
    
    
    
    109,600Minimum pension liability
    
    
    (2,172
    )
    
    
    (2,172
    )Retained earnings
    
    
    83,448
    
    
    
    82,881Total Stockholders Equity
    
    
    210,388
    
    
    
    209,621Total Liabilities and Stockholders Equity
    
    $
    438,680
    
    
    $
    440,393
  4




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six months endedJune 302006
    
    2005(in thousands)(Unaudited)Cash flows from operating activitiesNet income (loss)
    
    $
    567
    
    
    $
    (6,158
    )Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activitiesDepreciation and amortization
    
    
    5,155
    
    
    
    7,751Deferred income taxes
    
    
    295
    
    
    
    (3,740
    )Equity in operations of equity investees
    
    
    8
    
    
    
    (17
    )Amortization of deferred loan costs
    
    
    316
    
    
    
    326Amortization of television and radio broadcast rights
    
    
    9,336
    
    
    
    10,410Payments for television and radio broadcast rights
    
    
    (9,494
    )
    
    
    (9,987
    )Other
    
    
    327
    
    
    
    350Change in operating assets and liabilitiesReceivables
    
    
    (3,167
    )
    
    
    (1,049
    )Prepaid expenses
    
    
    (944
    )
    
    
    (602
    )Cash value of life insurance and retirement deposits
    
    
    (292
    )
    
    
    152Other assets
    
    
    (275
    )
    
    
    (40
    )Trade accounts payable, accrued payroll and related benefits, interest
payable, and other current liabilities
    
    
    (665
    )
    
    
    (4,482
    )Income taxes receivable and payable
    
    
    
    
    
    
    (306
    )Accrued retirement benefits
    
    
    80
    
    
    
    788Other liabilities
    
    
    1,860
    
    
    
    245Net cash provided by (used in) operating activities
    
    
    3,107
    
    
    
    (6,359
    )Cash flows from investing activitiesProceeds from collection of notes receivable
    
    
    
    
    
    
    1,585Proceeds from sale of marketable securities
    
    
    
    
    
    
    247Investment in equity investee
    
    
    (4,000
    )Deposit paid for purchase of Oregon television stations
    
    
    (3,500
    )Purchase of property, plant and equipment
    
    
    (6,903
    )
    
    
    (3,955
    )Net cash used in investing activities
    
    
    (14,403
    )
    
    
    (2,123
    )Cash flows from financing activitiesPayments under notes payable
    
    
    
    
    
    
    (53
    )Payment of deferred loan costs
    
    
    
    
    
    
    (87
    )Proceeds from exercise of stock options
    
    
    177
    
    
    
    3,068Excess tax benefit from exercise of stock options
    
    
    10Net cash provided by financing activities
    
    
    187
    
    
    
    2,928Net decrease in cash and cash equivalents
    
    
    (11,109
    )
    
    
    (5,554
    )Cash and cash equivalents, beginning of period
    
    
    19,622
    
    
    
    16,025Cash and cash equivalents, end of period
    
    $
    8,513
    
    
    $
    10,471
  5




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FISHER COMMUNICATIONS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Six months ended
    
    Three months endedJune 30
    
    June 302006
    
    2005
    
    2006
    
    2005(in thousands)(Unaudited)Net income (loss)
    
    $
    567
    
    
    $
    (6,158
    )
    
    $
    2,268
    
    
    $
    (1,090
    )Other comprehensive income (loss):Unrealized gain (loss) on marketable securities
    
    
    (423
    )
    
    
    6,294
    
    
    
    18,429
    
    
    
    16,890Effect of income taxes
    
    
    148
    
    
    
    (2,204
    )
    
    
    (6,450
    )
    
    
    (5,912
    )Less: Reclassification adjustment for gains included
in net loss
    
    
    
    
    
    
    (106
    )
    
    
    
    
    
    
    (106
    )(275
    )
    
    
    3,984
    
    
    
    11,979
    
    
    
    10,872Comprehensive income (loss)
    
    $
    292
    
    
    $
    (2,174
    )
    
    $
    14,247
    
    
    $
    9,782
  6




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Stock-based Compensation
     7




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##### Table of Contents



Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement 109 (FIN 48 or the Interpretation) Accounting for Income Taxes.
 , Accounting
for Certain Hybrid Instruments,
   8




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Six months ended
    
    
    Three months endedJune 30
    
    
    June 302006
    
    
    2005
    
    
    2006
    
    
    2005(Unaudited)Revenue
    
    $
    6,049
    
    
    $
    5,901
    
    
    $
    3,302
    
    
    $
    3,257Income from discontinued operations:Discontinued operating activities
    
    $
    868
    
    
    $
    631
    
    
    $
    734
    
    
    $
    573Income tax effect
    
    
    (306
    )
    
    
    (221
    )
    
    
    (258
    )
    
    
    (201
    )$
    562
    
    
    $
    410
    
    
    $
    476
    
    
    $
    372
   Goodwill, net
    
    $
    8,683Property, plant and equipment, net
    
    
    2,266Intangible assets
    
    
    1,244Other assets
    
    
    400$
    12,593
       9




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##### Table of Contents



Six months ended
    
    Three months endedJune 30
    
    June 302006
    
    2005
    
    2006
    
    2005Service cost
    
    $
    
    
    
    $
    80
    
    
    $
    
    
    
    $
    40Interest cost
    
    
    520
    
    
    
    534
    
    
    
    260
    
    
    
    267Amortization of loss
    
    
    77
    
    
    
    175
    
    
    
    39
    
    
    
    87Recognition of remaining transition obligation, curtailment loss
    
    
    
    
    
    
    451
    
    
    
    
    
    
    
    451Net periodic pension cost
    
    $
    597
    
    
    $
    1,240
    
    
    $
    299
    
    
    $
    845
  2006
    
    
    2005Discount Rate
    
    
    5.48
    %
    
    
    5.02% - 5.74
    %Rate of Compensation increase
    
    
    
    
    
    
    3.00
    %
       10




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##### Table of Contents



Stock options
 Restricted stock rights
 Determining Fair Value Under SFAS 123(R)
 Valuation and Amortization Method.
 Expected Life
 Expected Volatility
 Risk-Free Interest Rate.
 Expected Dividend Yield.
 Expected Forfeitures.
 11




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Six months endedJune 302006
    
    2005Assumptions:Weighted average risk-free interest rate
    
    
    4.8
    %
    
    
    4.1
    %Expected dividend yield
    
    
    0
    
    
    
    0Expected volatility
    
    
    33
    %
    
    
    31
    %Expected life of options
    
    6 years
    
    6 yearsWeighted average fair value at date of grant
    
    $
    17.57
    
    
    $
    19.74
  Stock-based Compensation Under SFAS 123(R)
    Six Months Ended
    
    Three Months
    EndedJune 30
    
    June 30Condensed consolidated statement of operations:Decrease in income from operations
    
    $
    (236
    )
    
    $
    (115
    )Decrease in income before income taxes
    
    
    (236
    )
    
    
    (115
    )Decrease in net income
    
    
    (153
    )
    
    
    (75
    )Decrease in basic and diluted net income per share
    
    
    (0.02
    )
    
    
    (0.01
    )Condensed consolidated statement of cash flows:Decrease in net cash provided by operating activities
    
    
    (10
    )
    
    
    Increase in net cash provided by financing activities
    
    
    10
    
    
    
    
 12




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##### Table of Contents



Stock Award Activity
  Stock Options
    
    
    Restricted Stock RightsWeighted
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    WeightedExercise
    
    
    Remaining
    
    
    Aggregate
    
    
    
    
    
    
    AverageNumber
    
    
    Price Per
    
    
    Contractual
    
    
    Intrinsic
    
    
    Number
    
    
    Grant-Dateof Shares
    
    
    Share
    
    
    Life
    
    
    Value
    
    
    of Shares
    
    
    Fair ValueOutstanding at December 31, 2005
    
    
    275,430
    
    
    $
    52.88
    
    
    
    
    
    
    
    
    
    
    
    4,000
    
    
    $
    46.89Options and stock rights granted
    
    
    39,100
    
    
    
    42.70
    
    
    
    
    
    
    
    
    
    
    
    6,400
    
    
    
    42.70Options exercised/stock rights
vested
    
    
    (4,800
    )
    
    
    36.86
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    49.75Options expired
    
    
    (4,000
    )
    
    
    37.25Options and stock rights forfeited
    
    
    (43,505
    )
    
    
    52.40Outstanding at June 30, 2006
    
    
    262,225
    
    
    $
    52.03
    
    
    5.9 years
    
    $
    119,000
    
    
    
    10,150
    
    
    $
    44.18Exercisable at June 30, 2006
    
    
    163,500
    
    
    $
    55.49
    
    
    4.2 years
    
    $
    97,000
   Pro Forma Information Under SFAS 123 and APB 25
  Six months ended
    
    Three months endedJune 30, 2005
    
    June 30, 2005Net loss, as reported
    
    $
    (6,158
    )
    
    $
    (1,090
    )Add: stock-based compensation included in net loss, net of tax
    
    
    197
    
    
    
    Deduct: total stock-based compensation determined under fair
value method for all awards, net of tax
    
    
    (181
    )
    
    
    (159
    )Pro forma net loss
    
    $
    (6,142
    )
    
    $
    (1,249
    )Basic and diluted net loss per share:As Reported
    
    $
    (0.71
    )
    
    $
    (0.13
    )Pro forma
    
    $
    (0.71
    )
    
    $
    (0.14
    )
   13




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##### Table of Contents



Six Months
    
    
    Three MonthsEnded June 30
    
    
    Ended June 302006
    
    
    2005
    
    
    2006
    
    
    2005Television
    
    $
    48,850
    
    
    $
    44,196
    
    
    $
    25,991
    
    
    $
    23,370Radio
    
    
    18,172
    
    
    
    17,091
    
    
    
    12,081
    
    
    
    11,470Fisher Plaza
    
    
    4,292
    
    
    
    3,996
    
    
    
    2,128
    
    
    
    2,078Corporate and eliminations
    
    
    (43
    )
    
    
    (105
    )
    
    
    (10
    )
    
    
    (53
    )Continuing operations
    
    
    71,271
    
    
    
    65,178
    
    
    
    40,190
    
    
    
    36,865Discontinued operations
    
    
    6,049
    
    
    
    5,901
    
    
    
    3,302
    
    
    
    3,257$
    77,320
    
    
    $
    71,079
    
    
    $
    43,492
    
    
    $
    40,122
  Six months
    
    
    Three monthsEnded June 30
    
    
    Ended June 302006
    
    
    2005
    
    
    2006
    
    
    2005Television
    
    $
    8,684
    
    
    $
    1,435
    
    
    $
    6,085
    
    
    $
    2,486Radio
    
    
    (207
    )
    
    
    (1,068
    )
    
    
    183
    
    
    
    (93
    )Fisher Plaza
    
    
    1,089
    
    
    
    102
    
    
    
    579
    
    
    
    178Corporate and eliminations
    
    
    (2,739
    )
    
    
    (4,357
    )
    
    
    (1,029
    )
    
    
    (1,703
    )Continuing operations
    
    
    6,827
    
    
    
    (3,888
    )
    
    
    5,818
    
    
    
    868Discontinued operations
    
    
    868
    
    
    
    631
    
    
    
    734
    
    
    
    573$
    7,695
    
    
    $
    (3,257
    )
    
    $
    6,552
    
    
    $
    1,441
  Six months
    
    
    Three monthsended June 30
    
    
    ended June 302006
    
    
    2005
    
    
    2006
    
    
    2005Total segment income (loss) before
interest and income taxes
    
    $
    6,827
    
    
    $
    (3,888
    )
    
    $
    5,818
    
    
    $
    868Interest expense
    
    
    (6,822
    )
    
    
    (6,775
    )
    
    
    (3,368
    )
    
    
    (3,404
    )$
    5
    
    
    $
    (10,663
    )
    
    $
    2,450
    
    
    $
    (2,536
    )
 14




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June 30,
    
    
    December 31,Total assets
    
    2006
    
    
    2005Television
    
    $
    84,899
    
    
    $
    92,543Radio
    
    
    32,114
    
    
    
    41,487Fisher Plaza
    
    
    120,347
    
    
    
    118,611Corporate and eliminations
    
    
    188,727
    
    
    
    187,752Continuing operations
    
    
    426,087
    
    
    
    440,393Discontinued operations
    
    
    12,593
    
    
    
    $
    438,680
    
    
    $
    440,393
        15




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16




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the six months ended June 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    71,375
    
    
    $
    (104
    )
    
    $
    71,271Costs and expensesCost of services sold
    
    
    
    
    
    
    33,923
    
    
    
    811
    
    
    
    34,734Selling expenses
    
    
    
    
    
    
    12,267
    
    
    
    
    
    
    
    12,267General and administrative expenses
    
    
    4,223
    
    
    
    10,875
    
    
    
    (915
    )
    
    
    14,183Depreciation and amortization
    
    
    124
    
    
    
    4,903
    
    
    
    
    
    
    
    5,0274,347
    
    
    
    61,968
    
    
    
    (104
    )
    
    
    66,211Income (loss) from operations
    
    
    (4,347
    )
    
    
    9,407
    
    
    
    
    
    
    
    5,060Other income, net
    
    
    1,576
    
    
    
    191
    
    
    
    
    
    
    
    1,767Equity in income of subsidiaries
    
    
    6,664
    
    
    
    
    
    
    
    (6,664
    )
    
    
    Interest expense
    
    
    (6,817
    )
    
    
    (5
    )
    
    
    
    
    
    
    (6,822
    )Income (loss) from continuing operations before income taxes
    
    
    (2,924
    )
    
    
    9,593
    
    
    
    (6,664
    )
    
    
    5Provision (benefit) for federal and state income taxes
    
    
    (3,491
    )
    
    
    3,491
    
    
    
    
    
    
    
    Income (loss) from continuing operations
    
    
    567
    
    
    
    6,102
    
    
    
    (6,664
    )
    
    
    5Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    562
    
    
    
    
    
    
    
    562Net income (loss)
    
    $
    567
    
    
    $
    6,664
    
    
    $
    (6,664
    )
    
    $
    567
 17




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the six months ended June 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    65,292
    
    
    $
    (114
    )
    
    $
    65,178Costs and expensesCost of services sold
    
    
    
    
    
    
    35,137
    
    
    
    778
    
    
    
    35,915Selling expenses
    
    
    
    
    
    
    11,260
    
    
    
    
    
    
    
    11,260General and administrative expenses
    
    
    5,686
    
    
    
    11,232
    
    
    
    (892
    )
    
    
    16,026Depreciation and amortization
    
    
    134
    
    
    
    7,485
    
    
    
    
    
    
    
    7,6195,820
    
    
    
    65,114
    
    
    
    (114
    )
    
    
    70,820Income (loss) from operations
    
    
    (5,820
    )
    
    
    178
    
    
    
    
    
    
    
    (5,642
    )Other income, net
    
    
    1,405
    
    
    
    349
    
    
    
    
    
    
    
    1,754Equity in income of subsidiaries
    
    
    777
    
    
    
    
    
    
    
    (777
    )
    
    
    Interest expense
    
    
    (6,775
    )
    
    
    
    
    
    
    
    
    
    
    (6,775
    )Income (loss) from continuing operations before income taxes
    
    
    (10,413
    )
    
    
    527
    
    
    
    (777
    )
    
    
    (10,663
    )Provision (benefit) for federal and state income taxes
    
    
    (4,255
    )
    
    
    160
    
    
    
    
    
    
    
    (4,095
    )Income (loss) from continuing operations
    
    
    (6,158
    )
    
    
    367
    
    
    
    (777
    )
    
    
    (6,568
    )Income from discontinued operations net of income taxes
    
    
    
    
    
    
    410
    
    
    
    
    
    
    
    410Net income (loss)
    
    $
    (6,158
    )
    
    $
    777
    
    
    $
    (777
    )
    
    $
    (6,158
    )
 18




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended June 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    40,242
    
    
    $
    (52
    )
    
    $
    40,190Costs and expensesCost of services sold
    
    
    
    
    
    
    19,232
    
    
    
    400
    
    
    
    19,632Selling expenses
    
    
    
    
    
    
    6,654
    
    
    
    
    
    
    
    6,654General and administrative expenses
    
    
    1,782
    
    
    
    5,126
    
    
    
    (452
    )
    
    
    6,456Depreciation and amortization
    
    
    62
    
    
    
    2,449
    
    
    
    
    
    
    
    2,5111,844
    
    
    
    33,461
    
    
    
    (52
    )
    
    
    35,253Income (loss) from operations
    
    
    (1,844
    )
    
    
    6,781
    
    
    
    
    
    
    
    4,937Other income, net
    
    
    789
    
    
    
    92
    
    
    
    
    
    
    
    881Equity in income of subsidiaries
    
    
    4,846
    
    
    
    
    
    
    
    (4,846
    )
    
    
    Interest expense
    
    
    (3,366
    )
    
    
    (2
    )
    
    
    
    
    
    
    (3,368
    )Income (loss) from continuing operations before income taxes
    
    
    425
    
    
    
    6,871
    
    
    
    (4,846
    )
    
    
    2,450Provision (benefit) for federal and state income taxes
    
    
    (1,843
    )
    
    
    2,501
    
    
    
    
    
    
    
    658Income (loss) from continuing operations
    
    
    2,268
    
    
    
    4,370
    
    
    
    (4,846
    )
    
    
    1,792Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    476
    
    
    
    
    
    
    
    476Net income (loss)
    
    $
    2,268
    
    
    $
    4,846
    
    
    $
    (4,846
    )
    
    $
    2,268
 19




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Operations
for the three months ended June 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Revenue
    
    $
    
    
    
    $
    36,921
    
    
    $
    (56
    )
    
    $
    36,865Costs and expensesCost of services sold
    
    
    
    
    
    
    19,562
    
    
    
    385
    
    
    
    19,947Selling expenses
    
    
    
    
    
    
    6,355
    
    
    
    
    
    
    
    6,355General and administrative expenses
    
    
    2,248
    
    
    
    5,253
    
    
    
    (441
    )
    
    
    7,060Depreciation and amortization
    
    
    65
    
    
    
    3,493
    
    
    
    
    
    
    
    3,5582,313
    
    
    
    34,663
    
    
    
    (56
    )
    
    
    36,920Income (loss) from operations
    
    
    (2,313
    )
    
    
    2,258
    
    
    
    
    
    
    
    (55
    )Other income, net
    
    
    735
    
    
    
    188
    
    
    
    
    
    
    
    923Equity in income of subsidiaries
    
    
    1,973
    
    
    
    
    
    
    
    (1,973
    )
    
    
    Interest expense
    
    
    (3,404
    )
    
    
    
    
    
    
    
    
    
    
    (3,404
    )Income (loss) from continuing operations before income taxes
    
    
    (3,009
    )
    
    
    2,446
    
    
    
    (1,973
    )
    
    
    (2,536
    )Provision (benefit) for federal and state income taxes
    
    
    (1,919
    )
    
    
    845
    
    
    
    
    
    
    
    (1,074
    )Income (loss) from continuing operations
    
    
    (1,090
    )
    
    
    1,601
    
    
    
    (1,973
    )
    
    
    (1,462
    )Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    372
    
    
    
    
    
    
    
    372Net income (loss)
    
    $
    (1,090
    )
    
    $
    1,973
    
    
    $
    (1,973
    )
    
    $
    (1,090
    )
 20




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of June 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    5,241
    
    
    $
    3,272
    
    
    $
    
    
    
    $
    8,513Receivables, net
    
    
    279
    
    
    
    31,055
    
    
    
    
    
    
    
    31,334Due from affiliate
    
    
    
    
    
    
    2,312
    
    
    
    (2,312
    )
    
    
    Income taxes receivable
    
    
    1,538
    
    
    
    
    
    
    
    (552
    )
    
    
    986Deferred income taxes
    
    
    73
    
    
    
    850
    
    
    
    
    
    
    
    923Prepaid expenses
    
    
    318
    
    
    
    3,521
    
    
    
    
    
    
    
    3,839Television and radio broadcast rights
    
    
    
    
    
    
    3,043
    
    
    
    
    
    
    
    3,043Assets held for sale
    
    
    
    
    
    
    400
    
    
    
    
    
    
    
    400Total current assets
    
    
    7,449
    
    
    
    44,453
    
    
    
    (2,864
    )
    
    
    49,038Marketable securities, at market value
    
    
    169,202
    
    
    
    430
    
    
    
    
    
    
    
    169,632Investment in consolidated subsidiaries
    
    
    231,721
    
    
    
    
    
    
    
    (231,721
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,308
    
    
    
    10,287
    
    
    
    
    
    
    
    15,595Television and radio broadcast rights
    
    
    
    
    
    
    1,551
    
    
    
    
    
    
    
    1,551Goodwill, net
    
    
    
    
    
    
    30,122
    
    
    
    
    
    
    
    30,122Intangible assets
    
    
    
    
    
    
    330
    
    
    
    
    
    
    
    330Investments in equity investee
    
    
    
    
    
    
    6,751
    
    
    
    
    
    
    
    6,751Prepaid financing fees and other assets
    
    
    4,854
    
    
    
    4,644
    
    
    
    
    
    
    
    9,498Assets held for sale
    
    
    
    
    
    
    12,193
    
    
    
    
    
    
    
    12,193Property, plant and equipment, net
    
    
    804
    
    
    
    143,166
    
    
    
    
    
    
    
    143,970Total Assets
    
    $
    419,338
    
    
    $
    253,927
    
    
    $
    (234,585
    )
    
    $
    438,680LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    683
    
    
    $
    3,200
    
    
    $
    
    
    
    $
    3,883Payable to affiliate
    
    
    2,312
    
    
    
    
    
    
    
    (2,312
    )
    
    
    Accrued payroll and related benefits
    
    
    1,035
    
    
    
    4,358
    
    
    
    
    
    
    
    5,393Interest payable
    
    
    3,773
    
    
    
    
    
    
    
    
    
    
    
    3,773Television and radio broadcast rights payable
    
    
    
    
    
    
    1,367
    
    
    
    
    
    
    
    1,367Income taxes payable
    
    
    
    
    
    
    552
    
    
    
    (552
    )
    
    
    Other current liabilities
    
    
    1,500
    
    
    
    3,460
    
    
    
    
    
    
    
    4,960Liabilities of businesses held for sale
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    492Total current liabilities
    
    
    9,303
    
    
    
    13,429
    
    
    
    (2,864
    )
    
    
    19,868Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    19,640
    
    
    
    84
    
    
    
    
    
    
    
    19,724Deferred income taxes
    
    
    29,942
    
    
    
    1,844
    
    
    
    
    
    
    
    31,786Other liabilities
    
    
    65
    
    
    
    6,801
    
    
    
    
    
    
    
    6,866Liabilities of businesses held for sale
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    48Stockholders EquityCommon stock
    
    
    10,887
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,887Capital in excess of par
    
    
    8,900
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    8,900Accumulated other comprehensive income,
net of income taxes:Unrealized gain on marketable securities
    
    
    109,325
    
    
    
    
    
    
    
    
    
    
    
    109,325Minimum pension liability
    
    
    (2,172
    )
    
    
    
    
    
    
    
    
    
    
    (2,172
    )Retained earnings
    
    
    83,448
    
    
    
    66,356
    
    
    
    (66,356
    )
    
    
    83,448Total Stockholders Equity
    
    
    210,388
    
    
    
    231,721
    
    
    
    (231,721
    )
    
    
    210,388Total Liabilities and Stockholders Equity
    
    $
    419,338
    
    
    $
    253,927
    
    
    $
    (234,585
    )
    
    $
    438,680
 21




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Balance Sheet
as of December 31, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)ASSETSCurrent AssetsCash and cash equivalents
    
    $
    3,660
    
    
    $
    15,962
    
    
    $
    
    
    
    $
    19,622Receivables, net
    
    
    105
    
    
    
    28,061
    
    
    
    
    
    
    
    28,166Due from affiliate
    
    
    6,184
    
    
    
    
    
    
    
    (6,184
    )
    
    
    Income taxes receivable
    
    
    1,538
    
    
    
    
    
    
    
    (552
    )
    
    
    986Deferred income taxes
    
    
    7
    
    
    
    658
    
    
    
    
    
    
    
    665Prepaid expenses
    
    
    414
    
    
    
    3,881
    
    
    
    
    
    
    
    4,295Television and radio broadcast rights
    
    
    
    
    
    
    6,519
    
    
    
    
    
    
    
    6,519Total current assets
    
    
    11,908
    
    
    
    55,081
    
    
    
    (6,736
    )
    
    
    60,253Marketable securities, at market value
    
    
    169,634
    
    
    
    419
    
    
    
    
    
    
    
    170,053Investment in consolidated subsidiaries
    
    
    225,057
    
    
    
    
    
    
    
    (225,057
    )
    
    
    Cash value of life insurance and retirement deposits
    
    
    5,115
    
    
    
    10,188
    
    
    
    
    
    
    
    15,303Television and radio broadcast rights
    
    
    
    
    
    
    2,075
    
    
    
    
    
    
    
    2,075Goodwill, net
    
    
    
    
    
    
    38,354
    
    
    
    
    
    
    
    38,354Intangible assets
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,244Investments in equity investee
    
    
    
    
    
    
    2,759
    
    
    
    
    
    
    
    2,759Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prepaid financing fees and and other assets
    
    
    5,169
    
    
    
    871
    
    
    
    
    
    
    
    6,040Property, plant and equipment, net
    
    
    904
    
    
    
    143,408
    
    
    
    
    
    
    
    144,312Total Assets
    
    $
    417,787
    
    
    $
    254,399
    
    
    $
    (231,793
    )
    
    $
    440,393LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesTrade accounts payable
    
    $
    693
    
    
    $
    2,790
    
    
    $
    
    
    
    $
    3,483Payable to affiliate
    
    
    
    
    
    
    6,184
    
    
    
    (6,184
    )
    
    
    Accrued payroll and related benefits
    
    
    1,113
    
    
    
    6,242
    
    
    
    
    
    
    
    7,355Interest payable
    
    
    3,809
    
    
    
    
    
    
    
    
    
    
    
    3,809Television and radio broadcast rights payable
    
    
    
    
    
    
    5,524
    
    
    
    
    
    
    
    5,524Income taxes payable
    
    
    
    
    
    
    552
    
    
    
    (552
    )
    
    
    Other current liabilities
    
    
    2,058
    
    
    
    2,462
    
    
    
    
    
    
    
    4,520Total current liabilities
    
    
    7,673
    
    
    
    23,754
    
    
    
    (6,736
    )
    
    
    24,691Long-term debt
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Accrued retirement benefits
    
    
    19,560
    
    
    
    84
    
    
    
    
    
    
    
    19,644Deferred income taxes
    
    
    30,868
    
    
    
    513
    
    
    
    
    
    
    
    31,381Other liabilities
    
    
    65
    
    
    
    4,991
    
    
    
    
    
    
    
    5,056Stockholders EquityCommon stock
    
    
    10,881
    
    
    
    1,131
    
    
    
    (1,131
    )
    
    
    10,881Capital in excess of par
    
    
    8,590
    
    
    
    164,234
    
    
    
    (164,234
    )
    
    
    8,590Deferred compensation
    
    
    (159
    )
    
    
    
    
    
    
    
    
    
    
    (159
    )Accumulated other comprehensive income,
net of income taxes:Unrealized gain on marketable securities
    
    
    109,600
    
    
    
    
    
    
    
    
    
    
    
    109,600Minimum pension liability
    
    
    (2,172
    )
    
    
    
    
    
    
    
    
    
    
    (2,172
    )Retained earnings
    
    
    82,881
    
    
    
    59,692
    
    
    
    (59,692
    )
    
    
    82,881Total Stockholders Equity
    
    
    209,621
    
    
    
    225,057
    
    
    
    (225,057
    )
    
    
    209,621Total Liabilities and Stockholders Equity
    
    $
    417,787
    
    
    $
    254,399
    
    
    $
    (231,793
    )
    
    $
    440,393
 22




---



##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 2006
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    Subsidiaries(in thousands)Net cash provided by operating activities
    
    $
    1,420
    
    
    $
    1,687
    
    
    $
    
    
    
    $
    3,107Cash flows from investing activitiesInvestment in equity investee
    
    
    
    
    
    
    (4,000
    )
    
    
    
    
    
    
    (4,000
    )Deposit paid for purchase of Oregon television stations
    
    
    
    
    
    
    (3,500
    )
    
    
    
    
    
    
    (3,500
    )Purchase of property, plant and equipment
    
    
    (26
    )
    
    
    (6,877
    )
    
    
    
    
    
    
    (6,903
    )Net cash used in investing activities
    
    
    (26
    )
    
    
    (14,377
    )
    
    
    
    
    
    
    (14,403
    )Cash flows from financing activitiesExcess tax benefit from exercise of stock options
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10Proceeds from exercise of stock options
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    177Net cash provided by financing activities
    
    
    187
    
    
    
    
    
    
    
    
    
    
    
    187Net increase (decrease) in cash and cash equivalents
    
    
    1,581
    
    
    
    (12,690
    )
    
    
    
    
    
    
    (11,109
    )Cash and cash equivalents, beginning of period
    
    
    3,660
    
    
    
    15,962
    
    
    
    
    
    
    
    19,622Cash and cash equivalents, end of period
    
    $
    5,241
    
    
    $
    3,272
    
    
    $
    
    
    
    $
    8,513
 23




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##### Table of Contents



Financial Information for Guarantors
Condensed Consolidated Statement of Cash Flows
for the six months ended June 30, 2005
 100%
    
    
    
    
    
    FisherFisher
    
    Owned
    
    
    
    
    
    Communications,Communications,
    
    Guarantor
    
    
    
    
    
    Inc. andInc.
    
    Subsidiaries
    
    Eliminations
    
    SubsidiariesNet cash used in operating activities
    
    $
    (2,988
    )
    
    $
    (3,371
    )
    
    $
    
    
    
    $
    (6,359
    )Cash flows from investing activitiesProceeds from collection of note receivable
    
    
    
    
    
    
    1585
    
    
    
    
    
    
    
    1,585Proceeds from sale of marketable securities
    
    
    73
    
    
    
    174
    
    
    
    
    
    
    
    247Purchase of property, plant and equipment
    
    
    (228
    )
    
    
    (3,727
    )
    
    
    
    
    
    
    (3,955
    )Net cash used in investing activities
    
    
    (155
    )
    
    
    (1,968
    )
    
    
    
    
    
    
    (2,123
    )Cash flows from financing activitiesPayments under notes payable
    
    
    (44
    )
    
    
    (9
    )
    
    
    
    
    
    
    (53
    )Payment of deferred loan costs
    
    
    (87
    )
    
    
    
    
    
    
    
    
    
    
    (87
    )Proceeds from exercise of stock options
    
    
    3,068
    
    
    
    
    
    
    
    
    
    
    
    3,068Net cash provided by (used in) financing activities
    
    
    2,937
    
    
    
    (9
    )
    
    
    
    
    
    
    2,928Net decrease in cash and cash equivalents
    
    
    (206
    )
    
    
    (5,348
    )
    
    
    
    
    
    
    (5,554
    )Cash and cash equivalents, beginning of period
    
    
    1,007
    
    
    
    15,018
    
    
    
    
    
    
    
    16,025Cash and cash equivalents, end of period
    
    $
    801
    
    
    $
    9,670
    
    
    $
    
    
    
    $
    10,471
 24




---



##### Table of Contents



ITEM 2   MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS
 The following discussion and analysis should be read in conjunction with the Financial Statements
and related Notes thereto included elsewhere in this quarterly report on Form 10-Q. Some of the
statements in this quarterly report are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages
containing verbs such as `aims, anticipates, believes, estimates, expects, hopes, intends, plans,
predicts, projects or targets or nouns corresponding to such verbs. Forward-looking statements
also include any other passages that are primarily relevant to expected future events or that can
only be fully evaluated by events that will occur in the future. There are many risks and
uncertainties that
could cause actual results to differ materially from those predicted in our forward-looking
statements, including, without limitation, those factors discussed under the caption Risk Factors
in Item 1A of Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date of this report. We undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently arise. Readers are
urged to carefully review and consider the various disclosures made in this report and in our other
reports filed with the Securities and Exchange Commission that attempt to advise interested parties
of the risks and factors that may affect our business, prospects and results of operations. As used
herein, unless the context requires otherwise, when we say we, us, our, or the Company, we
are referring to Fisher Communications, Inc. and its consolidated subsidiaries.
      25




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##### Table of Contents



26




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES
   CONSOLIDATED RESULTS OF OPERATIONS
   27




---



##### Table of Contents



Six months
    
    
    
    
    
    
    
    
    
    
    Three monthsended June 30
    
    
    Variance
    
    
    ended June 30
    
    
    Variance2006
    
    
    2005
    
    
    $
    
    
    %
    
    
    2006
    
    
    2005
    
    
    $
    
    
    %(dollars in thousands)(Unaudited)RevenueTelevision
    
    $
    48,850
    
    
    $
    44,196
    
    
    $
    4,654
    
    
    
    10.5
    %
    
    $
    25,991
    
    
    $
    23,370
    
    
    $
    2,621
    
    
    
    11.2
    %Radio
    
    
    18,172
    
    
    
    17,091
    
    
    
    1,081
    
    
    
    6.3
    %
    
    
    12,081
    
    
    
    11,470
    
    
    
    611
    
    
    
    5.3
    %Fisher Plaza
    
    
    4,292
    
    
    
    3,996
    
    
    
    296
    
    
    
    7.4
    %
    
    
    2,128
    
    
    
    2,078
    
    
    
    50
    
    
    
    2.4
    %Corporate and eliminations
    
    
    (43
    )
    
    
    (105
    )
    
    
    62
    
    
    
    
    
    
    
    (10
    )
    
    
    (53
    )
    
    
    43Consolidated
    
    
    71,271
    
    
    
    65,178
    
    
    
    6,093
    
    
    
    9.3
    %
    
    
    40,190
    
    
    
    36,865
    
    
    
    3,325
    
    
    
    9.0
    %Cost of services soldTelevision
    
    
    22,252
    
    
    
    23,407
    
    
    
    (1,155
    )
    
    
    -4.9
    %
    
    
    11,102
    
    
    
    11,537
    
    
    
    (435
    )
    
    
    -3.8
    %Radio
    
    
    10,242
    
    
    
    10,440
    
    
    
    (198
    )
    
    
    -1.9
    %
    
    
    7,489
    
    
    
    7,361
    
    
    
    128
    
    
    
    1.7
    %Fisher Plaza
    
    
    1,429
    
    
    
    1,288
    
    
    
    141
    
    
    
    10.9
    %
    
    
    641
    
    
    
    666
    
    
    
    (25
    )
    
    
    -3.8
    %Corporate and eliminations
    
    
    811
    
    
    
    780
    
    
    
    31
    
    
    
    
    
    
    
    400
    
    
    
    383
    
    
    
    17Consolidated
    
    
    34,734
    
    
    
    35,915
    
    
    
    (1,181
    )
    
    
    -3.3
    %
    
    
    19,632
    
    
    
    19,947
    
    
    
    (315
    )
    
    
    -1.6
    %Selling expensesTelevision
    
    
    6,585
    
    
    
    5,933
    
    
    
    652
    
    
    
    11.0
    %
    
    
    3,368
    
    
    
    3,235
    
    
    
    133
    
    
    
    4.1
    %Radio
    
    
    5,581
    
    
    
    5,114
    
    
    
    467
    
    
    
    9.1
    %
    
    
    3,226
    
    
    
    2,998
    
    
    
    228
    
    
    
    7.6
    %Fisher Plaza
    
    
    101
    
    
    
    213
    
    
    
    (112
    )
    
    
    -52.6
    %
    
    
    60
    
    
    
    122
    
    
    
    (62
    )
    
    
    -50.8
    %Consolidated
    
    
    12,267
    
    
    
    11,260
    
    
    
    1,007
    
    
    
    8.9
    %
    
    
    6,654
    
    
    
    6,355
    
    
    
    299
    
    
    
    4.7
    %General and administrative
expensesTelevision
    
    
    8,524
    
    
    
    8,637
    
    
    
    (113
    )
    
    
    -1.3
    %
    
    
    4,042
    
    
    
    3,946
    
    
    
    96
    
    
    
    2.4
    %Radio
    
    
    2,177
    
    
    
    2,079
    
    
    
    98
    
    
    
    4.7
    %
    
    
    989
    
    
    
    952
    
    
    
    37
    
    
    
    3.9
    %Fisher Plaza
    
    
    146
    
    
    
    395
    
    
    
    (249
    )
    
    
    -63.0
    %
    
    
    81
    
    
    
    126
    
    
    
    (45
    )
    
    
    -35.7
    %Corporate and eliminations
    
    
    3,336
    
    
    
    4,915
    
    
    
    (1,579
    )
    
    
    -32.1
    %
    
    
    1,344
    
    
    
    2,036
    
    
    
    (692
    )
    
    
    -34.0
    %Consolidated
    
    
    14,183
    
    
    
    16,026
    
    
    
    (1,843
    )
    
    
    -11.5
    %
    
    
    6,456
    
    
    
    7,060
    
    
    
    (604
    )
    
    
    -8.6
    %Depreciation and amortizationTelevision
    
    
    2,935
    
    
    
    4,908
    
    
    
    (1,973
    )
    
    
    -40.2
    %
    
    
    1,464
    
    
    
    2,230
    
    
    
    (766
    )
    
    
    -34.3
    %Radio
    
    
    442
    
    
    
    595
    
    
    
    (153
    )
    
    
    -25.7
    %
    
    
    219
    
    
    
    296
    
    
    
    (77
    )
    
    
    -26.0
    %Fisher Plaza
    
    
    1,526
    
    
    
    1,981
    
    
    
    (455
    )
    
    
    -23.0
    %
    
    
    766
    
    
    
    967
    
    
    
    (201
    )
    
    
    -20.8
    %Corporate and eliminations
    
    
    124
    
    
    
    135
    
    
    
    (11
    )
    
    
    -8.1
    %
    
    
    62
    
    
    
    65
    
    
    
    (3
    )
    
    
    -4.6
    %Consolidated
    
    
    5,027
    
    
    
    7,619
    
    
    
    (2,592
    )
    
    
    -34.0
    %
    
    
    2,511
    
    
    
    3,558
    
    
    
    (1,047
    )
    
    
    -29.4
    %Income (loss) from operationsTelevision
    
    
    8,554
    
    
    
    1,311
    
    
    
    7,243
    
    
    
    
    
    
    
    6,015
    
    
    
    2,422
    
    
    
    3,593Radio
    
    
    (270
    )
    
    
    (1,137
    )
    
    
    867
    
    
    
    
    
    
    
    158
    
    
    
    (137
    )
    
    
    295Fisher Plaza
    
    
    1,090
    
    
    
    119
    
    
    
    971
    
    
    
    
    
    
    
    580
    
    
    
    197
    
    
    
    383Corporate and eliminations
    
    
    (4,314
    )
    
    
    (5,935
    )
    
    
    1,621
    
    
    
    
    
    
    
    (1,816
    )
    
    
    (2,537
    )
    
    
    721Consolidated
    
    
    5,060
    
    
    
    (5,642
    )
    
    
    10,702
    
    
    
    
    
    
    
    4,937
    
    
    
    (55
    )
    
    
    4,992Other income, net
    
    
    1,767
    
    
    
    1,754
    
    
    
    13
    
    
    
    
    
    
    
    881
    
    
    
    923
    
    
    
    (42
    )Interest expense, net
    
    
    (6,822
    )
    
    
    (6,775
    )
    
    
    (47
    )
    
    
    
    
    
    
    (3,368
    )
    
    
    (3,404
    )
    
    
    36Income (loss) from continuing
operations before income taxes
    
    
    5
    
    
    
    (10,663
    )
    
    
    10,668
    
    
    
    
    
    
    
    2,450
    
    
    
    (2,536
    )
    
    
    4,986Provision (benefit) for federal
and state
income taxes
    
    
    
    
    
    
    (4,095
    )
    
    
    4,095
    
    
    
    
    
    
    
    658
    
    
    
    (1,074
    )
    
    
    1,732Income (loss) from continuing
operations
    
    
    5
    
    
    
    (6,568
    )
    
    
    6,573
    
    
    
    
    
    
    
    1,792
    
    
    
    (1,462
    )
    
    
    3,254Income (loss) from discontinued
operations, net of income taxes
    
    
    562

    
    
    
    410
    
    
    
    152
    
    
    
    
    
    
    
    476
    
    
    
    372
    
    
    
    104Net income (loss)
    
    $
    567
    
    
    $
    (6,158
    )
    
    $
    6,725
    
    
    
    
    
    
    $
    2,268
    
    
    $
    (1,090
    )
    
    $
    3,358
 28




---



##### Table of Contents



Comparison of Fiscal Six and Three-Month Periods Ended June 30, 2006, and June 30, 2005
 Revenue
    Cost of services sold
     Selling expenses
  29




---



##### Table of Contents



General and administrative expenses
    Depreciation
  Other income, net
  Interest expense
  Provision (benefit) for federal and state income taxes
  Liquidity and capital resources
  30




---



##### Table of Contents



31




---



##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Interest Rate Exposure
  Marketable Securities Exposure
  
 ITEM 4  CONTROLS AND PROCEDURES
  32




---



##### Table of Contents




    
    In June 2006, we announced the resignation of Rob Bateman as Chief Financial Officer
and the intention to recruit for his successor.
    
    In July 2006, we resolved to reappoint Jodi Colligan as Vice President of Finance
and appointed her as Acting Chief Financial Officer until the next annual meeting of
the Directors or the election and qualification of her successor.
  33




---



##### Table of Contents



PART II
 
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Votes for
    
    Votes withheldJames W. Cannon
    
    
    7,200,875
    
    
    
    258,762Phelps K. Fisher
    
    
    6,984,130
    
    
    
    475,507Deborah L. Bevier
    
    
    7,225,483
    
    
    
    234,154Jerry A. St. Dennis
    
    
    7,243,958
    
    
    
    215,679
  
 Item 5. Other Information
  34




---



##### Table of Contents



Item 6. Exhibits
  10.1*
    
    Amendment and Agreement Regarding Asset Purchase Agreement dated May 1, 2006 between
Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La Grande Broadcasting,
Inc., EBC Boise, Inc. and EBC Pocatello, Inc. (filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K dated May 3, 2006 (File No. 000-22439)).10.2
    
    Purchase and Sale Agreement dated May 30, 2006 by and between Cherry Creek Radio LLC,
Fisher Communications, Inc. and Fisher Radio Regional Group Inc.10.3
    
    Stock Purchase Agreement dated June 26, 2006 by and among Christopher J. Racine,
African-American Broadcasting of Bellevue, Inc. and Fisher Broadcasting Company.10.4
    
    Local Marketing Agreement dated June 26, 2006 by and between Fisher Broadcasting
Company and African-American Broadcasting of Bellevue, Inc.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Acting Chief Financial Officer.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference. 35




---



##### Table of Contents



SIGNATURES
  FISHER COMMUNICATIONS, INC.(Registrant)Dated: August 8, 2006
    
    /s/ Jodi A. ColliganJodi A. ColliganVice President FinanceActing Chief Financial Officer
 36




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description10.1*
    
    Amendment and Agreement Regarding Asset Purchase Agreement dated May 1, 2006 between
Fisher Radio Regional Group Inc., Equity Broadcasting Corporation, La Grande Broadcasting,
Inc., EBC Boise, Inc. and EBC Pocatello, Inc. (filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K dated May 3, 2006 (File No. 000-22439)).10.2
    
    Purchase and Sale Agreement dated May 30, 2006 by and between Cherry Creek Radio LLC,
Fisher Communications, Inc. and Fisher Radio Regional Group Inc.10.3
    
    Stock Purchase Agreement dated June 26, 2006 by and among Christopher J. Racine,
African-American Broadcasting of Bellevue, Inc. and Fisher Broadcasting Company.10.4
    
    Local Marketing Agreement dated June 26, 2006 by and between Fisher Broadcasting
Company and African-American Broadcasting of Bellevue, Inc.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of Acting Chief Financial Officer.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Incorporated by reference. 37